U.S. Says Russia Set to Supply New Arms to Ukraine Rebels

The U.S. said there are signs Russia is planning to supply heavier weapons to rebels in east Ukraine, as Russia and Ukraine traded accusations of cross-border shelling.

“We have indications the Russians intend to move large-caliber weapons to the separatists,” U.S. Defense Department spokesman Steve Warren told reporters at the Pentagon yesterday. Deliveries of arms such as multiple-launch rocket systems are “imminent” as part of a “continuing flow” of weapons to the pro-Russian rebels, he said. Russia’s Foreign Ministry said it had no comment on Warren’s statement.

Ukraine’s Defense Ministry said yesterday that a border checkpoint at Marynivka in the Donetsk region “was attacked from Russian territory by mortars, Grad missile systems and artillery,” twice the previous evening. Rossiya 24 state television said about 40 artillery shells landed in Russia’s Rostov region from across the border and showed images of unexploded shells near a border post.

Amid rising tensions, the European Union said it’ll work “swiftly” to hit Russian industries with sanctions. The rebel stronghold of Donetsk, less than 100 kilometers (60 miles) from the border, awaits a possible onslaught by Ukrainian government forces.

Crash Probe

The July 17 downing of Malaysian Air (MAS) Flight 17 over eastern Ukraine, killing 298 passengers and crew, has dashed at least temporarily any chances of de-escalating the struggle between the rebels and the government. Russian President Vladimir Putin is facing pressure to expedite the probe into the crash, which the U.S. says was probably caused by a Russian-supplied missile.

The number of Russian troops on the border has risen to 12,000 from about 10,000, the Pentagon spokesman said.

The U.S. State Department first raised allegations of Russian cross-border fire two days ago. Russia rejected those accusations yesterday, with the Foreign Ministry saying in a statement that no evidence was provided to support the “false” claims because “it simply doesn’t exist.”

In turn, State Department spokeswoman Marie Harf told reporters in Washington yesterday that the U.S. has “seen no indications of Ukraine firing back into Russia.”

Amid the threat of broader EU sanctions, Russia’s central bank unexpectedly increased borrowing costs yesterday for a third time this year. The bank raised its one-week auction rate to 8 percent from 7.5 percent.

“There’s ample evidence” that sanctions imposed on Russia by the U.S. and the EU “are having an economic effect,” White House Press Secretary Josh Earnest told reporters in Washington.

Merkel Push

German Chancellor Angela Merkel is pushing her EU colleagues to sign off on measures against Russia by the end of next week and is prepared to accept curbs on her country’s technology exports to win support, according to two German government officials, who asked not to be named because the discussions are private.

The European Commission, the 28-nation EU’s regulatory arm, will draw up detailed proposals for broader sanctions after getting the go-ahead from diplomats yesterday, commission spokeswoman Maja Kocijancic told reporters.

EU governments have already agreed to go beyond existing travel bans and asset freezes on individuals and companies deemed responsible for the unrest in Ukraine. The next wave may stop state-owned banks from financing themselves in Europe and prevent Russian companies buying high-tech equipment to develop energy resources, according to a document obtained yesterday by Bloomberg News.

Parliament Session

Ukraine’s parliament will hold a special session of parliament on July 31 after the collapse of the ruling coalition and the resignation of Prime Minister Arseniy Yatsenyuk.

The move, announced late yesterday on President Petro Poroshenko’s website, came after Poroshenko, Yatsenyuk, the speaker of parliament, Oleksandr Turchynov and leaders of the parties in the legislature met to discuss how to carry on until a new coalition is formed.

Lawmakers plan to vote on two government-proposed bills, including one on funding the military and cutting social spending required under Ukraine’s $17 billion International Monetary Fund aid deal, that failed to gain approval before they went into a recess. They’ll also hold a vote of confidence in Yatsenyuk’s government.

IMF Managing Director Christine Lagarde spoke to Poroshenko and Yatsenyuk today to encourage “steady implementation” of the IMF program, the fund said in a statement.

Donetsk Defiance

As Ukraine pushed forward with a ground offensive to regain territory lost to the rebels, separatist leader Alexander Borodai said he’s preparing for block-to-block fighting to defend Donetsk.

Ukrainian Foreign Minister Pavlo Klimkin and his Australian counterpart, Julia Bishop, signed an agreement to deploy armed Australian military, police and civil personnel to help secure the site where the Malaysian plane came down, the Ukrainian ministry said on its website. Twenty-eight Australians were among the victims.